In 1Q08 same-store sales increased 4.1% vs 9.0% last year. The averaged check increased 3.5% and they opened 25 new company-owned restaurants. Importantly, average weekly sales increased 5.6% for the quarter, 150 basis points better that same-store sales increase. Driving the impressive 1Q sales trends was a 27% increase in media spending. The trend should continue into Q2 with media spending up 50% versus last year.
- Bucking the trend of most restaurant companies, BWLD was able to leverage its strong sales trends with EBIT margins up 50bps. Helping drive margins higher were lower COGS. Specifically, wings averaged $1.33 per pound during 1Q08 versus last year's average of $1.40. Additional leverage came from significantly lower SG&A in absolute dollars. The lower SG&A help BWLD get to the numbers due to significantly higher pre-opening expenses.
- At 22x NTM EPS there is significant momentum at BWLD, but the aggressive ramp in capital spending catches our eye. History has shown that aggressive capital spending can lead to careless decisions. It will be important to look for signs of stress in new stores average unit volumes.